A very good year for South Florida housing

In 2013, transition to more normal market will continue, analyst says

New home construction is on the rise by luxury home builder Toll Brothers… (Susan Stocker, Sun Sentinel )

December 30, 2012|By Paul Owers, Sun Sentinel

Delray Beach Mayor Woodie McDuffie used to get an earful about foreclosures when he met quarterly with homeowner's association presidents.

"At one time – two years ago – the No. 1 topic was foreclosures," said McDuffie, whose term expires this week. "Now, it's no longer in the top 10."

And that's a good thing. South Florida's once-beleaguered housing market made big strides in 2012. After six years of declines, home prices started inching up again.

Homebuilders grew more confident, filling orders amid increasing demand from record-low interest rates. Foreign investors helped gobble up the excess supply of condominiums built during the housing boom, prompting a new wave of condo construction across the region.

Sellers, meanwhile, took control in negotiations as bidding wars often erupted over a dwindling supply of properties.

"What really moved the market in 2012 was the lack of inventory," said Amanda Wilson, a real estate agent with Esslinger Wooten Maxwell in Fort Lauderdale. "People were looking for properties they could have bought 18 months ago, but they couldn't find them. They waited too long."

Housing bottom

Heading into 2012, a common refrain among analysts was that South Florida home prices wouldn't hit bottom until late in the year at the earliest and more likely sometime in 2013.

But by the summer, most pundits and research firms agreed that the worst of the historic housing collapse was over.

Real estate website Zillow.com said in April that the bottom was here — and it actually arrived in late 2011.

Roughly four in 10 South Florida homeowners with a mortgage still are "underwater," owing more than their properties are worth. But price increases will help reduce this so-called negative equity, Zillow Chief Economist Stan Humphries said in a statement.

"After a sluggish 2011, the housing market really turned a corner in 2012, as historic affordability and sustained investor interest helped keep demand at a boil," he said.

Despite concerns that the "fiscal cliff" could send the nation's economy into another recession, Humphries said "we can expect a continued slow transition to a more normal housing environment" in 2013.

Foreclosures

Florida posted the nation's highest foreclosure rate in November for the third consecutive month, according to RealtyTrac Inc. Still, the problem that escalated in 2007 isn't nearly what it once was.

Last month, for instance, more than 29,600 Florida homes received a foreclosure filing, but that number is less than half of the state's peak of 64,588 in April 2009.

Like Delray's McDuffie, Boca Raton Mayor Susan Whelchel said the issue of foreclosures rarely comes up at City Hall these days.

"People in Boca have no problem saying when they don't like something," she said. "We really get very few emails and/or phone complaints as a result of properties not being cared for, and we did have that a number of years ago."

In February, 49 state attorneys general announced a $25 billion settlement with five major lenders over allegations of improper foreclosure practices.

After the settlement, homeowners and their lawyers said banks were easier to deal with as they approved tens of thousands of mortgage modifications and short sales. Some homeowners even received mortgage balance reductions, which lenders had been extremely reluctant to offer in the past.

Industry followers still are bracing for the impact of thousands of distressed homes that have yet to hit the market. Some fear this "shadow inventory" could hurt the recovery, while others say lenders are likely to continue listing these homes for sale at a slow pace to keep prices from falling.

"It makes no sense for the banks to dump the inventory onto the market all at once," said Greg McBride, senior financial analyst at Bankrate.com in North Palm Beach.

Rental market

Former homeowners burned by the housing bust kept South Florida's rental market humming in 2012.

With little new construction over the past several years, dozens of developers in 2012 announced or started apartment projects in Coconut Creek, Pompano Beach, Boca Raton, Delray Beach and other areas.

In Fort Lauderdale, The Related Group broke ground on the New River Yacht Club, a 249-unit apartment complex that's the first residential construction in the city's downtown in five years. Also on the south side of the New River, developer Asi Cymbal is moving forward with plans to build roughly 1,000 rentals.

"We think demand will outstrip supply for the right location, right product," Cymbal said. "We're seeing more of a transient population than we ever had in the recent past."